Goal set for $300bn electronics manufacturing with a $120bn of exports
The Government is laser focused on achieving the target of US$300 billion electronics production by 2026, and make India a trusted partner in global value chains.
Stating this, Minister of State for Electronics & Information Technology Rajeev Chandrasekhar said, “And for this, we have always emphasised on strengthening our domestic manufacturing ecosystem to make India more resilient to supply chain disruptions.
“Our aim is to emerge as a reliable and trusted partner in Global value chains.”
The Minister launched a report, ‘Globalise to Localise: Exporting at Scale and Deepening the Ecosystem are Vital to Higher Domestic Value Addition’ on 29 Aug 2022.
The report by India Council for Research on International Economic Relations (ICRIER), in collaboration with India Cellular and Electronics Association (ICEA), explores how India can achieve electronics production target of US$300 billion and exports of US$120 by 2025-26.
Chandrasekhar said the report will help the Government identify the challenges that are to be met and the strategies that are to be adopted to achieve this target.
Talking about the journey of electronics sector in India in last some years, the Minister said, “We were, in 2014, a country that was increasingly dependent not just on petroleum imports but also on electronics imports.”
“Today, we are, as a consequence of policies of the government, a US$76 billion manufacturing economy with US$16 billion of exports, with a target of US$21 to US$25 billion of exports next year.
“But most importantly by 2026, we have clearly laid out goal of US$300 billion manufacturing with a US$120 billion of exports. That strategy talks about broadening and deepening of the electronics ecosystem.”
Chandrasekhar further added that the report postulates that “we must export aggressively to reach the scale in electronics manufacturing”.
“In addition to domestic production, and supplies and domestic consumption, the exports are important way to get the scales of the other economies that are competing with us.
“Exports will create a network effect of creating the supply chain interests, and supply chain investments that in turn will increase the value addition in the Indian electronics segment.”
The report, Globalise to Localise, examines the empirical relationship between exports and the share of domestic value addition in successful exporting nations. It finds that the two variables are negatively correlated in the short-run, but exhibit positive correlation in the medium-term.
“Our study finds that China and Vietnam have adopted the mantra of ‘first globalise, then localize’, which means in the initial years they were determined to achieve global scale in exports, and then shifted their emphasis to greater use of local contents,” said Dr. Deepak Mishra, Director and CE of ICRIER and the lead author of the report.
The report, therefore, recommends a sequential approach that can put India’s exports in the same trajectory as China and Vietnam.
The immediate goal should be to export at scale to global markets (globalise), and the subsequent objective should be to increase the share of local content (localise).
The report suggests several steps and policies needed for deepening the broader electronics ecosystem within India.
Additionally, policies such as Gati Shakti will also help increase India’s competitiveness.
Echoing the findings of the report, Pankaj Mohindroo, Chairman of ICEA, added, “We have resurrected this industry after near total collapse in 2014. As a first step, we used Project Management Professionals (PMP) to build a US$36 billion mobile industry.
“We are now pushing for global exports via Production Linked Incentive (PLI schemes) and a total production of US$300 billion. With exports as our key focus, we are working on policies that will increase domestic value addition over the next few years.”
According to ICEA, early results of the PLI Scheme are beginning to show. India’s electronics exports crossed US$16 billion in FY 2021-22.
Electronics as a sector has jumped to the 6th largest export from India this year. Mobile phones constitute the single largest component of electronics exports from India. They are expected to contribute nearly 50% of the total electronics exports by next year.
The report points to an urgent need for India to create a competitive domestic ecosystem of ancillary suppliers through technology upgradation programmes, holding sourcing fairs and introducing supporting industry development programmes.
ICRIER is an autonomous economic policy think tank, in operation since 1981.
ICEA is the apex industry body for the mobile and electronics industry comprising manufacturers, brand owners, technology providers, VAS application & solution providers, distributors, and retail chains of mobile handsets and electronics. fiinews.com
